6b517bbbe092ed90657e-e87f61d6c272d3a7e8ddccf5e9815e01.ssl.cf2.rackcdn.com ›


Weekly Market Recap - Rackcdn.comhttps://6b517bbbe092ed90657e-e87f61d6c272d3a7e8ddccf5e9815e01.ssl.cf2.rackcdn.com ›...

0 downloads 15 Views 838KB Size

Weekly Market Recap May 24, 2021

Price

Price Returns

Index Close Week YTD S&P 500 Index 4,156 -0.4% 10.6% Dow Jones Industrial Average 34,208 -0.5% 11.8% NASDAQ 13,471 0.3% 4.5% Russell 2000 Index 2,225 -2.1% 12.6% MSCI EAFE Index 2,308 0.7% 7.5% 10-yr Treasury Yield 1.61% 0.0% 0.7% Oil WTI ($/bbl) $63.85 -2.3% 31.6% Bonds* $114.34 0.0% -2.7% Source: Bloomberg, FactSet *Bonds represented by the iShares U.S. Aggregate Bond ETF Last Week: U.S. Equity Market • U.S. large cap equities (S&P 500® Index) fell -0.4%, as concerns related to increasing inflation offset generally positive earnings reports, particularly from large retailers. Defensive and technology-oriented sectors outperformed value/cyclical sectors, reversing the trend of recent weeks. The White House cut its infrastructure proposal from ~$2.3T to $1.7T, and Republicans responded that it is still well above the range that Congress can pass with bipartisan support. The dollar was weaker, gold was up +2.1%, WTI crude oil fell -2.7%, and Bitcoin* plunged over 30%. • S&P 500 Index Sector Returns: o REITs (+0.9%), utilities (+0.3%), and consumer staples (+0.1%) outperformed, as investors favored defensive sectors. o Health care (+0.7%) outperformed, led by Bristol-Myers Squibb (+3.3%), Medtronic (+1.6%), Merck (+1.1%), Cerner (+1.0%), and Anthem (+0.6%). o Information technology (+0.1%) modestly outperformed, as a several high-multiple software and platform companies bounced back after several weeks of significant declines. o Communication services (-0.6%) fell, led by AT&T (-6.9%), amid announcements of a dividend cut and a spinoff of WarnerMedia, Verizon (-3.0%), and Disney (-3%). o Financials (-0.9%) underperformed, led by the banks. o Consumer discretionary (-1.2%) underperformed, with weakness from Lowe’s (3.2%), Home Depot (-2.4%), Tesla (-1.5%), and Amazon (-0.6%). o Materials (-1.4%) underperformed, led by Ecolab (-4.4%). o Industrials (-1.7%) underperformed, led by airlines, and aerospace and defense stocks. o Energy (-2.8%) underperformed, as oil (WTI) fell -2.3%.

*Sterling Capital Management in no way recommends Bitcoin or other cryptocurrencies. Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. Please reference important disclosures on page 10.

1

Weekly Market Recap May 24, 2021



Year-to-date, small and value styles have been favored.

Source: Cornerstone Macro



U.S. equity inflows for 2021 are expected to reach an annualized $1.3 trillion, potentially three times greater than all net inflows for the previous 13 years combined.

Source: The Daily Shot Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. Please reference important disclosures on page 10.

2

Weekly Market Recap May 24, 2021



Meanwhile, equity issuance (as a percentage of GDP) eclipsed the level seen during the dot-com bubble.

Source: Marketwatch



Historically, equities decline at the beginning of an interest-rate tightening cycle, but ultimately, stocks recoup short-term losses and increase over longer periods.

Source: The Daily Shot

Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. Please reference important disclosures on page 10.

3

Weekly Market Recap May 24, 2021



S&P 500 Index margins hit a record high in the first quarter of 2021, as stocks benefitted from the global economic recovery.



NASDAQ gainers from 2020 are mostly taking a breather in 2021.

Source: The Daily Shot

Source: Deutsche Bank

Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. Please reference important disclosures on page 10.

4

Weekly Market Recap May 24, 2021



The chart below shows that the crypto market cap took off in late March/early April 2020 when the first round of COVID-19 stimulus checks were distributed. The total amount of stimulus payments distributed to date is $867B, ironically about the same amount lost in crypto since the highs on May 12.*

Source: Bespoke Investment Group

Fixed Income Markets •

U.S. yields are very low given current inflation data based on historical trends.

Source: The Daily Shot *Sterling Capital Management in no way recommends Bitcoin or other cryptocurrencies. Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. Please reference important disclosures on page 10.

5

Weekly Market Recap May 24, 2021



BBB-rated bonds are outperforming other investment-grade debt as investors reach for yield.

Source: The Daily Shot

U.S. Economic and Political News • Montana, South Carolina, and Arkansas announced they will no longer offer $300/week of additional unemployment benefits, with Montana Governor Greg Gianforte saying the extra benefits are “doing more harm than good…Why go to work when I get paid more on unemployment to sit at home?” • The Empire State Index dipped to 24.3 in May from 26.3 in April. • The Philadelphia Fed Index printed 31.5 in May, missing the 43.0 consensus estimate. • Weekly Jobless Claims fell to 444,000. • Existing Home Sales totaled 5.85 million annualized units in April, shy of the 6.08 million Street forecast. • IHS Markit’s Services Index rose to a record 70.1 in May, up from 64.7 in April. • IHS Markit’s Manufacturing PMI reached a record 61.5 in May, above April’s 60.5. • Minutes from the Federal Reserve’s April meeting revealed that “a number of participants suggested if the economy continue[s] to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.” In other words, the Fed might shelve emergency policy for an actual emergency, rather than keeping in place while the economy is booming. • “Policy projections suggesting that rates may not be raised for close to three years are creating a dangerous complacency,” former Treasury Secretary Lawrence Summers said at an Atlanta Fed conference. • Fed Governor Raphael Bostic said it will take “a couple of months” to understand whether inflationary pressures are as transitory as some of his Fed counterparts are predicting. Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. Please reference important disclosures on page 10.

6

Weekly Market Recap May 24, 2021





Boston Fed President Eric Rosengren said: “The mortgage market probably doesn’t need as much support now. In fact, one of my financial stability concerns would be if the housing market gets overheated.” Housing Starts slipped to 1.569 million annualized units, missing the 1.7 million consensus forecast, while Building Permits of 1.76 million nearly matched the 1.77 million expectation. o The following chart shows the substantial appreciation in California home prices of late.

Source: Bloomberg



Americans are increasingly using stimulus money to either save or pay down debt.



According to the CDC, more than three million teens received a COVID-19 vaccine dose already. Additionally, more than 50% of adults received at least one vaccine dose.

Source: Wolfe Research

Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. Please reference important disclosures on page 10.

7

Weekly Market Recap May 24, 2021

International Markets and News • The Chinese stock market (Shanghai Composite) fell -0.1%, as news that the Chinese government is planning an overhaul of Huarong Asset Management (China’s state-owned asset management company), which will require foreign and Chinese bondholders to accept significant losses on their investments. o Retail sales growth slowed to 4.3% in April from 6.4% in March for the two-year average. • European markets (STOXX 600 Index) rose 0.4% as the economy begins to rebound, partially offset by increasing inflation concerns. o The U.K. moved to phase two of its plan for lifting COVID-19 restrictions, which permits social mixing indoors, greater physical contact, and international travel. o Eurozone PMI climbed to 56.9 (over 50 signals expansion) in May from 53.8 in April. • Japanese equities (Nikkei 225 Index) rose 0.8%, as Japan’s April exports grew 38.0% year-over-year, the most since 2010. o Japan’s economy shrunk by an annualized -5.1% in the first quarter, primarily due to a drop in private consumption.

Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. Please reference important disclosures on page 10.

8

Weekly Market Recap May 24, 2021

This Week: •



Corporate earnings reports will decrease this week with notable earnings including, but not limited to: NVIDIA, Salesforce, Medtronic, Costco Wholesale, Royal Bank of Canada, Intuit, VMware, Snowflake, Autodesk, Workday, Dollar General, Veeva Systems, Autozone, Okta, Zscaler, Burlington Stores, HEICO, Ulta Beauty, Gamestop, Williams-Sonoma, Gap, and CIMB Group. U.S. Economic data: o Monday: Limited economic data o Tuesday: FHFA House Price Index, Case-Shiller Home Price Index, New Home Sales, Consumer Confidence o Wednesday: MBA Mortgage Purchase Applications o Thursday: Core Durable Orders, Durable Orders ex transport, Durable Orders, GDP Chain Price (first revision), GDP (first revision), Pending Home Sales o Friday: Core PCE, Personal Spending, Personal Income, Wholesale Inventories, Chicago PMI, Michigan Consumer Sentiment (Final)

As always, thank you very much for your interest in our thoughts and support of our services. Whitney Stewart, CFA® Executive Director Adam Bergman, CFA® Executive Director

Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. Please reference important disclosures on page 10.

9

Weekly Market Recap May 24, 2021

The securities described are neither a recommendation nor a solicitation. Security information is being obtained from resources the firm believes to be accurate, but no warrant is made as to the accuracy or completeness of the information. Performance is compared to an index, however, the volatility of an index varies greatly. Indices are unmanaged and investments cannot be made directly in an index. The S&P 500® Index is a readily available, carefully constructed, market-value-weighted benchmark of common stock performance. Currently, the S&P 500 Composite includes 500 of the largest stocks (in terms of stock market value) in the United States and covers approximately 80% of available market capitalization. The Russell 2000® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000® Index is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000® is constructed to provide a comprehensive and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set. The Dow Jones Industrial Average (DJIA) is an index that tracks 30 large, publicly-owned blue chip companies trading on the New York Stock Exchange (NYSE) and the NASDAQ. The NASDAQ Composite Index is the market capitalization-weighted index of over 2,500 common equities listed on the NASDAQ stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests. The index includes all Nasdaq-listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities. The MSCI EAFE Index is an equity index which captures large and mid-cap representation across 21 Developed Markets countries around the world, excluding the U.S. and Canada. With 900 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. Developed Markets countries in the MSCI EAFE Index include: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the U.K. The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 17 countries of the European region: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The Nikkei 225 is a price-weighted index composed of Japan's top 225 blue-chip companies traded on the Tokyo Stock Exchange. The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The Chartered Financial Analyst® (CFA) charter is a graduate-level investment credential awarded by the CFA Institute — the largest global association of investment professionals. To earn the CFA charter, candidates must: 1) pass three sequential, six-hour examinations; 2) have at least four years of qualified professional investment experience; 3) join CFA Institute as members; and 4) commit to abide by, and annually reaffirm, their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct. Past performance is not indicative of future results. Any type of investing involves risk and there are no guarantees. The opinions contained in the preceding commentary reflect those of Sterling Capital Management LLC, and not those of Truist Financial Corporation or its executives. The stated opinions are for general information only and are educational in nature. These opinions are not meant to be predictions or an offer of individual or personalized investment advice. They are not intended as an offer or solicitation with respect to the purchase or sale of any security. This information and these opinions are subject to change without notice. All opinions and information herein have been obtained or derived from sources believed to be reliable. Any type of investing involves risk and there are no guarantees. Sterling Capital Management LLC does not assume liability for any loss which may result from the reliance by any person upon such information or opinions. Investment advisory services are available through Sterling Capital Management LLC, a separate subsidiary of Truist Financial Corporation. Sterling Capital Management LLC manages customized investment portfolios, provides asset allocation analysis and offers other investment-related services to affluent individuals and businesses. Securities and other investments held in investment management or investment advisory accounts at Sterling Capital Management LLC are not deposits or other obligations of Truist Financial Corporation, Truist Bank or any affiliate, are not guaranteed by Truist Bank or any other bank, are not insured by the FDIC or any other federal government agency, and are subject to investment risk, including possible loss of principal invested. Sterling Capital does not provide tax or legal advice. You should consult with your individual tax or legal professional before taking any action that may have tax or legal implications.

10